Regional Expenditure Concentration and Its Implications

Oct 13, 2025 by talynt.org 32 views

Analysis of the Effect of the Composition of Regional Original Revenue (PAD) and the Concentration of Regional Expenditures on the Use of Budget in Regency/City Government in North Sumatra

The use of regional budgets is a crucial aspect of regional financial management, and understanding its dynamics is essential for effective governance. This study aims to examine the significant influence of Regional Original Revenue (PAD) and Regional Expenditures on the use of budgets in regencies/cities in North Sumatra Province. The main focus of this research is the period 2010 to 2013, using a causal research design and involving 24 districts/cities as a sample of 33 districts/cities in North Sumatra Province.

Regional Original Revenue (PAD) and Its Use

Regional Original Revenue (PAD) is one of the most important sources of income for local governments. PAD consists of various components, such as local taxes, levies, and other valid income. The composition of PAD has a significant positive influence on the use of regional budgets. That is, the higher the composition of PAD obtained, the better the use of the regional budget. This is important because the increasing PAD provides more space for local governments to run development programs that are beneficial to the community. The increase in PAD can also lead to a reduction in the reliance on external funding sources, thereby enhancing the autonomy of local governments.

The composition of PAD can be influenced by various factors, including the level of economic development, the effectiveness of tax collection, and the presence of other revenue sources. A well-diversified PAD can provide a stable source of income for local governments, reducing their dependence on external funding sources. This, in turn, can lead to more effective budget management and the implementation of development programs that are beneficial to the community.

Regional Expenditure Concentration and Its Implications

On the other hand, the concentration of regional spending also has a significant role in the use of the budget. Focused and well-planned regional spending can improve the efficiency of the use of the budget. This study found that the concentration of regional spending also had a significant positive impact on the use of the budget. When regional spending is allocated appropriately in the sectors in need, it will provide optimal results and have a direct impact on the welfare of the community.

The concentration of regional spending can be influenced by various factors, including the level of economic development, the effectiveness of budget planning, and the presence of other revenue sources. A well-planned regional spending can lead to a reduction in waste and inefficiency, thereby enhancing the effectiveness of the budget. This, in turn, can lead to more effective budget management and the implementation of development programs that are beneficial to the community.

Analysis of Budget Use

Through the multiple linear regression analysis applied in this study, it can be concluded that both PAD and regional expenditure have a positive and significant influence on the use of the budget in the Regency/City in North Sumatra. In other words, efforts to increase PAD and carry out good spending planning will greatly contribute to more effective budget management.

The results of this study also show that the interaction between PAD and regional expenditure has a significant positive impact on the use of the budget. This suggests that a well-diversified PAD and a well-planned regional spending can lead to more effective budget management and the implementation of development programs that are beneficial to the community.

Conclusion

From the results of this study, it can be concluded that the increase in the composition of PAD and the concentration of regional expenditure are two things that are interrelated and influence each other in the context of the use of regional budgets. For local governments, this is an important concern in formulating financial policies that aim to improve the quality of budget management and services to the community.

In addition, awareness of the importance of PAD and efficient spending planning can be a crucial first step to achieve sustainable regional development goals. By understanding the relationship between PAD and regional expenditure, the government can formulate a better strategy to manage the regional budget for the progress and welfare of the people in North Sumatra Province.

Recommendations

Based on the findings of this study, the following recommendations are made:

Local governments should prioritize the increase in PAD through the implementation of effective tax collection and the diversification of revenue sources.
Regional spending should be well-planned and focused on the sectors in need to improve the efficiency of the use of the budget.
The government should formulate a better strategy to manage the regional budget by understanding the relationship between PAD and regional expenditure.
Awareness of the importance of PAD and efficient spending planning should be increased among local government officials and the community.

By implementing these recommendations, local governments can improve the quality of budget management and services to the community, thereby achieving sustainable regional development goals.
Frequently Asked Questions (FAQs) on the Analysis of the Effect of the Composition of Regional Original Revenue (PAD) and the Concentration of Regional Expenditures on the Use of Budget in Regency/City Government in North Sumatra

This article aims to provide answers to frequently asked questions related to the analysis of the effect of the composition of Regional Original Revenue (PAD) and the concentration of regional expenditures on the use of budget in regency/city government in North Sumatra.

Q: What is Regional Original Revenue (PAD)?

A: Regional Original Revenue (PAD) is one of the most important sources of income for local governments. PAD consists of various components, such as local taxes, levies, and other valid income.

Q: What is the significance of PAD in the use of regional budgets?

A: The composition of PAD has a significant positive influence on the use of regional budgets. That is, the higher the composition of PAD obtained, the better the use of the regional budget.

Q: How can local governments increase PAD?

A: Local governments can increase PAD through the implementation of effective tax collection and the diversification of revenue sources.

Q: What is the role of regional expenditure concentration in the use of the budget?

A: The concentration of regional spending also has a significant role in the use of the budget. Focused and well-planned regional spending can improve the efficiency of the use of the budget.

Q: How can local governments improve the concentration of regional spending?

A: Local governments can improve the concentration of regional spending by allocating funds appropriately in the sectors in need and reducing waste and inefficiency.

Q: What is the relationship between PAD and regional expenditure?

A: The results of this study show that the interaction between PAD and regional expenditure has a significant positive impact on the use of the budget. This suggests that a well-diversified PAD and a well-planned regional spending can lead to more effective budget management and the implementation of development programs that are beneficial to the community.

Q: What are the implications of this study for local governments?

A: The findings of this study have important implications for local governments in North Sumatra Province. Local governments should prioritize the increase in PAD and improve the concentration of regional spending to achieve more effective budget management and the implementation of development programs that are beneficial to the community.

Q: What are the limitations of this study?

A: This study has several limitations, including the use of secondary data and the limited sample size. Future studies should aim to address these limitations and provide more comprehensive insights into the relationship between PAD and regional expenditure.

Q: What are the future research directions?

A: Future research should aim to explore the relationship between PAD and regional expenditure in other regions and to identify the factors that influence the effectiveness of budget management in local governments.

Q: What are the policy implications of this study?

A: The findings of this study have important policy implications for local governments in North Sumatra Province. Local governments should prioritize the increase in PAD and improve the concentration of regional spending to achieve more effective budget management and the implementation of development programs that are beneficial to the community.

By understanding the relationship between PAD and regional expenditure, local governments can formulate a better strategy to manage the regional budget for the progress and welfare of the people in North Sumatra Province.